Question

Exercise 17-7 On December 21, 2017, Pina Company provided you with the following information regarding its equity investments December 31, 2017 Fair Value Unrealized Gain CLoss) Investments (Trading) Cost Clemson Corp. stock Colorado Co. stock Buffaloes Co. stock Total of portfolio Previous fair value adjustment balance Fair value adjustment-Cr $19,800 $18,900 400 8,500 19,800 20,450 49,000 $47,850 $(900) (900) 650 (1,150 ) $(1,150) During 2018, Colorado Company stock was sold for $8,960. The fair value of the stock on December 31, 2018, was Clemson Corp, stock-$19,000: Buffaloes Co, sto 20,360. None of the equity investments result in significant influence. (a) Prepare the adjusting journal entry needed on December 31, 2017, (b) Prepare the Journal entry to record the sale of the Colorado Co. stock during 2018. (c) Prepare the adjusting journal entry needed on December 31, 2018

Answer 1

	Particulars	Debit	Credit
a	Unrealized Holding Gain or Loss - Income	$1,150
	Fair value Adjustment		$1,150
b	cash	$8,960
	Loss on Sale of Investment	$440
	Equity Investment (trading)		$9,400
c	Fair value Adjustment	$910
	Unrealized Holding Gain or Loss - Income		$910

Stock	Cost	Fair Value	Unrealized Gain(Loss)
Clemson Corp. Stock	$19,800	$19,000	-$800
Buffaloes Co. stock	$19,800	$20,360	$560
Net unrealized gain (loss)			-$240
2017			-$1,150
Fair value adjustment for 2018			-$910